A balanced portfolio with strong diversification and low costs for moderate risk tolerance

Report created on Apr 18, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of three main Vanguard ETFs: Total Stock Market (70%), Total International Stock (20%), and Total Bond Market (10%). This allocation leans heavily towards equities, reflecting a growth-oriented strategy. Compared to benchmarks, this setup offers a broad market exposure with a tilt towards U.S. equities. The bond allocation provides some stability and income, though it is relatively modest. This composition supports a balanced approach, ideal for those seeking growth with some risk mitigation. Consider whether this equity-heavy allocation aligns with your risk tolerance and investment goals.

Growth Info

Historically, this portfolio has delivered a solid CAGR of 9.84%, indicating robust growth potential over time. The maximum drawdown of -32.27% highlights the potential for significant temporary losses, which is common in equity-heavy portfolios. The portfolio's performance is aligned with its risk profile, offering substantial returns during favorable market conditions. Comparing this to benchmarks, the portfolio performs well, but it's crucial to remain aware that past performance does not guarantee future results. Maintaining a long-term perspective is key to weathering market fluctuations.

Projection Info

The Monte Carlo simulation, a method using historical data to project future outcomes, indicates an annualized return of 6.83% across 1,000 simulations. While 920 simulations showed positive returns, the 5th percentile suggests potential losses of -9.1%. This highlights the importance of preparing for various market scenarios. Though projections suggest growth, they are not predictions. Use these insights to ensure your portfolio aligns with your risk tolerance and financial goals, acknowledging that actual returns may vary.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset allocation includes 89% in stocks and 10% in bonds, with a minimal 1% in cash. This distribution favors growth through equities while providing some stability via bonds. Compared to typical balanced portfolios, this allocation leans towards higher risk and potentially higher returns. Diversification across asset classes is crucial for managing risk and capturing opportunities in different market conditions. Consider whether this mix aligns with your financial objectives and risk tolerance, potentially adjusting the bond allocation for added stability if needed.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation shows a significant concentration in technology (24%), followed by financial services (15%) and consumer cyclicals (10%). This tech-heavy focus aligns with current market trends but can lead to higher volatility, especially during interest rate hikes. Compared to benchmarks, this sector distribution is typical for growth-oriented portfolios. Diversifying across sectors can help mitigate sector-specific risks. Consider whether this concentration in technology aligns with your risk appetite and if adjustments are needed to balance exposure across sectors for enhanced stability.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly in North America (71%), with limited exposure to other regions. This U.S.-centric focus can benefit from the stability and growth of the U.S. market but may miss opportunities in emerging markets. Compared to global benchmarks, the portfolio is under-diversified geographically. Expanding exposure to international markets can enhance diversification and reduce reliance on a single region. Assess whether increased global diversification aligns with your investment strategy, potentially adjusting allocations to capture growth in underrepresented regions.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    27%
  • Mid-cap
    17%
  • Small-cap
    5%
  • Micro-cap
    2%

The portfolio's market capitalization is weighted towards mega-cap stocks (38%), followed by large (27%) and medium (17%) caps. This focus on larger companies can offer stability and consistent returns but may limit growth potential compared to smaller-cap stocks. Compared to benchmarks, this allocation is typical for balanced portfolios. Diversifying across different market caps can enhance growth opportunities and risk management. Evaluate whether this market cap distribution aligns with your investment goals, potentially increasing exposure to small-cap stocks for higher growth potential.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This method helps identify the optimal allocation for maximizing returns at a given risk level. While the portfolio is well-diversified, slight adjustments in allocation could enhance efficiency. Consider whether optimization aligns with your investment goals, potentially reallocating assets to achieve a more favorable risk-return balance. Remember, efficiency is about maximizing returns relative to risk, not necessarily diversification.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.96%

The portfolio's dividend yield is 1.96%, with contributions from both stock and bond ETFs. Dividends provide a steady income stream, beneficial for reinvestment or income generation. The bond ETF's higher yield (3.40%) adds stability and income, while stock ETFs offer growth potential. This yield is reasonable for a balanced portfolio, aligning with typical income-focused strategies. Consider whether the current dividend yield meets your income needs, potentially adjusting allocations to enhance income generation if desired. Reinvesting dividends can also support long-term growth.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.03%. Low costs are crucial for maximizing long-term returns, as fees can significantly erode gains over time. Compared to industry averages, this TER is highly competitive, supporting better performance. Maintaining low costs is a key component of an efficient investment strategy. Continue to monitor expense ratios to ensure they remain favorable, potentially exploring opportunities to further reduce costs without sacrificing quality or diversification.

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